Updating US Foreign Assistance Tools and Development Policy for the Post-Aid World
By Todd J. Moss
Vice President and Senior Fellow
Center for Global Development
U.S. Senate hearing on
"Different Perspectives on International Development"
Committee on Foreign Relations
Subcommittee on International Development and Foreign Operations, Economic Affairs, International
Environmental Protection, and Peace Corps
May 22, 2013
Thank you, Chairman Kaine, Ranking Member Barrasso, and distinguished Members of the Committee.
US foreign assistance should be a critical tool for promoting US foreign policy and meeting other
national security, economic, political, and humanitarian goals around the world. It should be a
prominent and proud component of projecting America’s power and projecting a positive image of what
America is all about: the generosity and compassion of our people, the spreading of free market values
and economic opportunity, the bedrock belief we hold that hard work can provide a better life for the
next generation, the inviolable rights of individuals, the aspiration that all people everywhere should live
free from tyranny. Foreign assistance should be able to play a role in supporting all of these goals and
core American values. To be clear, foreign assistance can’t deliver any of these goals. But it can and
should be a useful tool to complement our military and diplomatic and business efforts.
Unfortunately, US foreign assistance has too often not lived up to its potential and instead been a
perennial underperformer. An underperformer for American taxpayers, an underperformer in
supporting US foreign policy objectives, and an underperformer in meeting global development goals.
Yes, there are successes: US support for Liberian reconstruction, US support for the global effort that
eradicated river blindness in West Africa, and especially the tremendous success of the US fight against
HIV/AIDS through PEPFAR, which is providing life-saving drugs for some 5 million people. These are 5
million lives directly saved by US foreign assistance. But there are also too many examples, even where
attention was intense and large funds promised, of abject failure. The US effort in Haiti to “build back
better,” where some $3 billion was promised but three years later there are still an estimated 400,000
people living in tents is a national shame. US aid to help fight terrorism and build democracy in Mali also
clearly failed. I had the tremendous honor to serve in the Africa Bureau of the State Department in
2007-08 and worked closely on Mali, so I know how badly our efforts there fell short—and it is a failure
for which I bear some responsibility.
I believe that this disappointing record of US assistance stems from a structural problem in how the US
government works. Recent efforts under the current administration—a first Quadrennial Diplomacy and
Development Review (QDDR), a separate White House Presidential Policy Directive (PPD) on Global
Development, and a set of business reforms within USAID known as USAID Forward—are all well
intentioned and aimed to help fix the problems that everyone recognizes. But these efforts are not
working. USAID Forward is too small-ball, while the PPD is bold and in the right direction but not being
implemented. The QDDR, in addition to sapping the administration’s energy on development for more
than eighteen months, is likely making US policy even more confused.
To be clear, I do not believe that the problems of US foreign assistance can be fixed by more money and
more staff. The aid budget may very well be too low, but in many places it is too high. The funding
levels, which attract so much attention, are not fundamentally germane to the problems of
effectiveness. I also do not believe that the answer lies with additional investigative powers to root out
corruption or additional bureaucratic layers to coordinate aid agencies. In fact either of these
approaches is likely to make the aid system and US policy even less effective.
I see three fundamental problems with US foreign assistance:
First, there are too many federal agencies with aid programs. Some 24 separate agencies report aid to
the OECD’s Development Assistance Committee. In the latest year, just 35 percent of total foreign aid
goes through USAID. By contrast, the UK has a single large aid agency, DFID, that not only is tasked to
ensure internal coherence, but also provides a development perspective within the cabinet to inform
foreign policy goals. I don’t believe that the British model works in the US political system, but I also
know that having 24 agencies involved doesn’t work either. The QDDR, which embraces uncritically a
whole-of-government approach, is probably making this worse.
Second, foreign aid has too many, often conflicting, objectives. Lael Brainard in the book on foreign aid
she published just before becoming US Treasury Undersecretary for International Affairs found that US
aid had more than 50 goals.1 That the US has multiple and often conflicting goals is not surprising—
foreign policy is complex and cannot be boiled down to a few simple absolute goals. But when we have
too many goals and priorities, then we really have none.
To make matters worse, these objectives are entirely divorced from the appropriations process. Rather
than setting goals in a national development strategy and then allocating resources to meet these goals,
multiple single issue initiatives are given resources and the strategy becomes the sum of those disparate
parts. For example, if we want to support reconstruction in Afghanistan or support budget reform in
Kenya, or fight malaria in Mozambique, there is no obvious or clear way to make tradeoffs between
these goals or to choose the most efficient mechanism to accomplish them. Sometimes the best way to
meet these goals is through the World Bank or the Global Fund rather than USAID. But of course US
support to the multilateral development banks is made by the Treasury and Congressional responsibility
is with your Committee and the House Financial Services Committee, while appropriations are handled
by the State and Foreign Operations Subcommittees. This leads to a particular disconnect on the House
side, with little ability to make clear decisions as to whether bilateral or multilateral aid is more effective
1
Brainard, Lael. 2006. Security by Other Means: Foreign Assistance, Global Poverty and American Leadership.
Brookings Institution Press, Washington, DC. Brainard’s “Spaghetti Bowl” of US foreign assistance legislation,
objectives, and organizations is attached as Annex A.
2
for particular goals. So the direct tradeoff between the Bank, the Global Fund and USAID is never made.
In short, part of the problem is the sprawling federal government and part of the problem is Congress.
One way to consider the tradeoffs among the various bilateral and multilateral vehicles would be to
formally consider the options against efficiency and alignment with national interests, as the United
Kingdom has done with its bilateral and multilateral aid reviews.2
Third, the interagency process is broken. The interagency that should work out the tensions and
tradeoffs among various objectives is, as anyone who works in the federal government can attest,
dysfunctional. Every initiative is a fire drill and requires intense NSS staff direction and oversight. But
NSS too small and overburdened to really do more than a few priority tasks. The result is too often delay
of key decisions, frequent duplication of effort, and little accountability. If there are multiple agencies
collectively accountable then in reality no one is accountable. And critically, the broken interagency
combined with narrow mandates often means that we miss huge opportunities to use non-aid tools to
meet our foreign policy objectives. Immigration policy, for instance, is probably a far better and more
efficient development tool than our aid program, but we rarely use it as such.3
What steps would make things work better?
First, limit, don’t expand, the number of agencies involved. Ideally the budgets and staffs of most
international programs should be moved into USAID. If this is too politically difficult, and I suspect it
probably is, then agencies should be forced to secund staff and pass through their budgets to USAID for
those critical projects. While the whole-of-government mantra suggests the more agencies involved the
better, the opposite is true. The fewer number of agencies involved—and the fewer offices of the State
Department—the better. Whole-of-government may work in small European governments with a
handful of agencies and a small number of people who all know each other and can horse-trade to work
out problems. This does not—and I believe cannot— work in the US context because of the sheer size
and fragmentation of the federal government.
Second, link the budget process to goals and results—and allow experimentation with new models.
This would imply Congress granting greater flexibility to the agencies to determine allocations and
specific projects, but also could provide a mechanism for holding those agencies accountable by adding
measurable indicators. This approach could draw heavily on the MCC’s compact model where objectives
and indicators are agreed over a 5-year period. Rather than checking every receipt and micromanaging
the projects, the compact is judged based on the overall success of the portfolio in meeting the stated
objectives. Congress could even provide USAID and other agencies space to experiment with innovative
pay-for-performance contracts where US taxpayers would only be picking up the bills for actual
achievements. We at the Center for Global Development call this Cash-on-Delivery and see it as an
opportunity to make aid—and tax dollars—about outcomes, not inputs or even outputs, while also
building local management capacity and innovation and reducing transaction costs.4
Third, development finance is an obvious target for efficiency gains. Some consolidation of agencies
with overlapping activities is highly desirable, and the lowest-hanging fruit are the various federal
2
A version of an American multilateral aid review that I completed is attached as Annex B.
Clemens, Michael and Kaci Farrell. 2011. “Beyond Aid: Migration as a Tool for Disaster Recovery.” Center for
Global Development, Washington, DC.
4
Birdsall, Nancy and William Savedoff. 2010. Cash on Delivery: A New Approach to Foreign Aid. Center for Global
Development, Washington, DC.
3
3
activities to promote private sector development. At a time when most low-income countries are
growing quickly and receiving windfall gains from resource discoveries, demand for traditional grant aid
will be diminishing. US development policy must be careful not to remain stuck in the past. What
countries want, and where the United States is really best placed to help, is with other types of
development finance: debt, equity, venture, and other kinds of patient capital that can leverage private
capital and be deployed for long-term development.
The good news is that many of the tools already exist. The bad news is that they are spread across
multiple federal agencies, including the Overseas Private Investment Corporation (OPIC), the Trade and
Development Agency (TDA), USAID, Commerce, Labor, Treasury, USDA, USTR, and more. And, like
traditional aid, only rarely do they work well together. In the 2012 State of the Union, President Obama
noted the absurdity that there are twelve different agencies that deal with exports and pledged to
“merge, consolidate, and reorganize the federal government in a way that best serves the goal of a
more competitive America.” What applies to export promotion also applies to development finance.
To be clear, I do not support the merger of OPIC into the Commerce Department—indeed that would be
a tremendous mistake because the purposes of those agencies are very different. But I do believe a
consolidation among the development finance tools would be highly beneficial. A first simple step would
be to bolster OPIC into a full-service US Development Finance Corporation.5 This would imply granting
OPIC additional authorities such as multiyear authorization, equity authority, and a modest grant
window. It could also bring in complementary tools we already have in other agencies, such as TDA’s
feasibility study window, USAID’s Development Credit Authority (DCA), and international programs of
agencies like the Small Business Administration.
A US Development Finance Corporation could be built using existing staff and resources and at no
additional cost to the US budget by allowing OPIC to simply retain its profits. More importantly, a
bilateral development finance corporation could provide a platform for coherence of US policy tools in
support of the private sector, allow the US to better compete in new markets, and limit the repeated
scrambling within the interagency. An approach like the USDFC would not only be more desirable from
an efficiency standpoint, but is likely necessary if the US is going to achieve ambitious goals, such as
building market opportunities in the next wave of frontier markets or promoting electrification in Africa.
For all the reasons outlined above, our current system simply cannot deliver those goals.
The United States must remain engaged with the world, especially in the fastest growing markets and
emerging regions of the globe. US foreign assistance and our other development policy tools must be
modernized if we are to succeed, and not be left behind by others who are showing more flexibility and
more innovation. Thank you for the opportunity to testify today.
5
Forthcoming paper, “US Development Finance Corporation: Strengthening OPIC to Promote Private Sector
Development in Emerging Markets,” by Benjamin Leo, Todd Moss, and Beth Schwanke. Center for Global
Development, Washington, DC.
4
Annex A
US Foreign Assistance Legislation, Objectives and Organizations
Legislation, Presidential Initiatives and Strategy Papers
Foreign Assistance Act of 1961
Foreign Assistance Objectives
Poverty Reduction
US Foreign Assistance Organizations
USAID
Economic Growth
Bush Administration's FY 2003 Budget Request
2002 National Security Strategy
FREEDOM Support Act of 1992 (Former Soviet States)
SEED Act of 1989 (East European Democracy)
US Leadership Against HIV/AIDS, TB and Malaria Act of 2003
Legislation
Millennium Challenge Act of 2003
FY 2004 Emergency Supplemental Appropriations Act
Migration and Refugee Assistance Act of 1962
Agricultural Trade Development and Assistance Act of 1954
Arms Export Control Act of 1976
Bretton Woods Agreement Act of 1945
President Bush's HIV/AIDS Act of 2003
HELP Commission Act
Special Foreign Assistance Act of 1986
International Security Assistance Act of 1979
Microenterprise Results and Accountability Act of 2004
Assistance for Orphans and Other Vulnerable Children
in Developing Countries Act of 2005
Bureau of Democracy, Conflict and Humanitarian Assistance
Business Development
Market Reform
Encourage Foreign Investment
Financial Technical Assistance
International Trade
Democratization
Media Freedom
Transparency and Accountability
Presidential Initiatives in USAID
Central American Free Trade Agreement
Clean Energy Initiative
Congo Basin Forest Partnership
Digital Freedom Initiative
Faith-based and Community Initiatives
Global Fund to Fight Aids, Tuberculosis and Malaria
Initiative to End Hunger in Africa
Trade for African Development and Enterprise
Volunteers for Prosperity
Presidential Initiatives
Outside USAID
Water for the Poor Initiative
Bureau of Global Health
Nonproliferation, Anti-terrorism, de-mining
and related programs
Office of Transition Initiatives
Famine Early Warning System Network
The Millennium Challenge Corporation
Child Survival
Strengthen Civil Society
Education
Human Rights
Department of State
Bureau of Democracy, Human Rights and Labor
Office of the Global AIDS Coordinator
Middle East Peace Initiative
Office to Monitor and Combat Trafficking in Persons
Empowerment of Women
Bureau for Population, Refugees and Migration
Religious Freedom
Office of Politico-Military Affairs
Labor Reform
Bureau of International Narcotics
and Law Enforcement Affairs
Affordable Nuclear Energy
Humanitarian Information Unit
Special Coordinator's Office
Agricultural Development
Bureau of Economic and Business Affairs,
Trade Policy and Programs Division
Global Health
Bureau of Oceans and International Environmental
and Scientific Affairs
HIV/AIDS
Office of International Health Affairs
Tuberculosis and Malaria
Department of Defense
Humanitarian Assistance
Disaster Relief
Famine Relief
Migration Assistance
Refugee Assistance
Prevention of Human Trafficking
Department of Treasury
Office of Foreign Asset Controls
Office of Technical Assistance
Office of International Affairs
Department of Health and Human Services
National Institutes of Health
Office of Global Health
Anti-terrorism
Counter-narcotics
Biodiversity Preservation
Office of International Affairs
Department of Agriculture
Foreign Agricultural Service (Food for Progress,
McGovern-Dole Food for Education)
Global Climate Change
Natural Resource Management
Middle East Partnership Initiative
Ensure Water Access
President's Emergency Plan for AIDS Relief
Sustainable Forest Management
President's Initiative Against Illegal Logging
Human Resources Development
Department of Commerce
Trafficking in Persons
Conflict Prevention
United States Trade Representative
Forest Service
Women's Justice and Empowerment in Africa
Accelerating the Fight Against Malaria
Policy Framework for Bilateral Aid (January 2006)
New Initiatives
Bureau of Economic Growth, Agriculture and Trade
Monitoring and Evaluation
Nonproliferation
Centers for Excellence in Teacher Training
Food for Peace
International Military Education and Training Program
Governance / Rule of Law
National Security Strategy of the USA (2006)
Africa Education Initiative
Office of US Foreign Disaster Assistance
and Famine Assistance
Economic Support Fund
Job Creation
USAID White Paper on American Foreign Aid
Afghanistan Road Initiative
Office of Democracy and Governance
White Paper - US Foreign Aid: meeting the Challenges
of the 21st Century
Fragile States Strategy (January 2005)
Democracy and Governance Strategic Framework
Mitigating the Development Impacts of HIV/AIDS
Foreign Aid in the National Interest
USAID - State Strategic Plan
Nine Principles (February 2005)
Conflict Resolution
Department of Energy
United States Court
Environmental
Protection
of International
Agency
Trade
Peacekeeping Operations
Stabilization
Overseas Private Investment Corporation (OPIC)
De-mining Operations
Peace Corps
Security
US Trade and Development Agency
Reconstruction
Export-Import Bank of the United States
Infrastructure Construction
Foreign Military Assistance
FEMA (Office of International Affairs)
Scientific and Technological Innovation
US Small Business Administration
Information Technology
African Development Foundation
Business Transformation
Source: Lael Brainard, Security by Other Means (Brookings, 2006)
Inter-American Development Foundation
Office of National Drug Control Policy
Annex B
PRELIMINARY DRAFT
Measuring Value for Money in U.S. Contributions to Multilateral Organizations
An American Version of the British Multilateral Aid Review
Todd Moss and Stephanie Majerowicz
July 27, 2011
Figure 1
Notes: Bubble sizes represent relative U.S. contributions to each organization in 2009; color-coding represents the quartiles of
an overall index multiplying scores on both dimensions.
Background: A U.S. version of the UK’s Multilateral Aid Review
In March 2011 the United Kingdom’s Department for International Development (DFID) released the
results of a review of 43 multilateral institutions that receive UK funding. Summarized in Figure 2 below,
the Multilateral Aid Review (MAR) assesses each institution in terms of the “value for money” to British
taxpayers, based on indices measuring contribution to UK objectives and organizational strengths.1 Each
index draws on a combination of qualitative evidence and expert opinion polling.
Figure 2
Real-World Impact of the MAR: Importantly, the results impact UK spending allocations. Partly based
on the MAR, the UK government has announced funding increases to top performers (IDA, UNICEF,
GAVI) while those at the very bottom (UN-HABITAT, ILO, UNIDO, UNISDR) are being zeroed out.2
Methodology for the U.S. MAR: Since no similar exercise exists for the United States, CGD replicated
a MAR-like exercise for the 26 multilateral agencies that receive U.S. government funds (minimum $5
million, FY2009). Following the DFID model, we rank each multilateral agency on “alignment with U.S.
development objectives” and “organizational strengths.”

1
Alignment with U.S. objectives. As a proxy for U.S. development objectives we use the four goals
articulated by the 2010 Presidential Policy Directive on Global Development: (1) Foster
sustainable, broad-based economic growth; (2) Focus on governance and public-sector capacity
DFID, “Multilateral Aid Review,” March 2011, p. 3.
http://www.dfid.gov.uk/Documents/publications1/mar/multilateral_aid_review.pdf
2
FAO, UNESCO, the Commonwealth Secretariat, and the IOM were put on a probationary watch list. See DFID, “Taking
Forward the Findings of the UK Multilateral Aid Review,” March 2011.
http://www.dfid.gov.uk/Documents/publications1/mar/Taking-forward.pdf
building: (3) Invest in innovative policies and research into new vaccines, interventions and
technologies; and (4) Focus on post-conflict and fragile states, including humanitarian post-crisis
response. Following the British model (which combined DFID staff judgments with expert views
from outside development think tanks), we based this index on a poll of CGD senior staff. The
13 respondents, including specialists with expertise in a broad range of U.S. foreign policy and
development issues, scored each organization on their contributions to each of the four objectives
from 1 (“very weak”) to 4 (“very strong”). A simple average of the four scores for each of
organization was calculated as the measure of “alignment with U.S. development objectives.”3

Organizational Strengths. Two measures of organizational strength were used:
o
o
UK scores from the MAR. Because this indicator is not U.S. specific, in Figure 1 we
apply the DFID measure of organizational strength, compiled from assessments by DFID
staff along five criteria.
QuODA Scores from CGD. The Quality of Official Development Assistance (QuODA)
index assesses aid quality using 30 quantitative indicators in four dimensions.4 In Figure
3, we use an average QuODA score, however this only allows a measure for 12
institutions.
Figure 3
3
The poll included an option of “don’t know” and average scores include only scores of those who responded to at least three out
of the four components for any given organization. Likewise, only organizations with a minimum level of responses were
included, which led to the exclusion of the CIFs, the Central Emergency Relief Fund, and the IFRC.
4
Nancy Birdsall and Homi Kharas, “Quality of Official Development Assistance,” 2010. http://cgdev.org/quoda.